Torrential rain and flooding in parts of southern China could weigh on steel and coal demand, and hinder growth of crops including rice.

Regions located south of the Yangtze River including Guizhou, Sichuan and Yunnan will see frequent rains over the next 10 days, according to the National Meteorological Center. Most of these places have been hit by heavy rains and should be alert to secondary impact such as mudslides, the center said.

Last week, floods in Yunnan’s Qiubei county killed four people and several people were reported missing, broadcaster CCTV reported Friday. Yunnan is a major aluminum production hub, accounting for 11% of China’s capacity.

The weather has affected downstream construction activity and is likely to keep demand for steel rebar suppressed ahead of a major holiday later this week, researcher Shanghai Metals Market said in a note Tuesday.

China’s meteorological center also flagged the impact on agricultural output. Precipitation in some southern China regions may be 30% to 70% higher than normal. Continued rainfall is unfavorable to the robust growth of rice crops, and high humidity can increase the risks of pests and diseases, the center said.

High rainfall will likely boost hydropower output and hurt demand for coal for thermal power generation, the China Coal Transportation and Distribution said.

Source:
courtesy of BLOOMBERG

by Bloomberg News

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